Business Certification For Sales Staff: Quiz!
(505).jpg "Business Certification For Sales Staff: Quiz! - Quiz")
.
- 1.
According to Dodd-Frank and EMIR, certain derivatives are required to be centrally cleared by a Central Counterparty (CCP). Which of the following statements is true?
- A.
Banks will no longer be required to provide independent mark to market of derivatives
- B.
The centrally cleared trades will require the counterparties to deposit initial and variation margin with the CCP
- C.
Non American and non European counterparties will not centrally clear trades with their European and American counterparties
- D.
Banks will no longer be able to take positions with huge outstanding notionals
Correct Answer
B. The centrally cleared trades will require the counterparties to deposit initial and variation margin with the CCPExplanation
According to Dodd-Frank and EMIR, certain derivatives are required to be centrally cleared by a Central Counterparty (CCP). This means that the trades will require the counterparties to deposit initial and variation margin with the CCP. This is done to ensure that there is sufficient collateral to cover potential losses in the event of a default by one of the counterparties. By requiring the counterparties to deposit margin, it adds an extra layer of protection and reduces the risk in the derivatives market.Rate this question:
-
- 2.
Proprietary Trading will most likely be done by which of the following:
- A.
Private Bank
- B.
Local Commercial Bank
- C.
Car Importer
- D.
Hedge Fund
Correct Answer
D. Hedge FundExplanation
Hedge funds are investment funds that pool capital from accredited individuals or institutional investors and use various strategies to generate high returns. Proprietary trading refers to trading activities conducted by the firm using its own funds and resources. Hedge funds often engage in proprietary trading as part of their investment strategies to generate profits. Private banks primarily focus on providing personalized financial services to high-net-worth individuals, while local commercial banks typically provide traditional banking services to the local community. Car importers are involved in the business of importing and selling cars, which is unrelated to proprietary trading.Rate this question:
-
- 3.
Which of the following functions is typically NOT the responsibility of the back office:
- A.
Clearing and settlement of all Front Office deals
- B.
Mitigating operational risk
- C.
Record keeping of all Front Office deals
- D.
Running daily risk checks such as VaR aand sensitivity analysis on the Front Office
Correct Answer
D. Running daily risk checks such as VaR aand sensitivity analysis on the Front OfficeExplanation
Running daily risk checks such as VaR and sensitivity analysis on the Front Office is typically NOT the responsibility of the back office. The back office is primarily responsible for tasks such as clearing and settlement of all Front Office deals, mitigating operational risk, and record keeping of all Front Office deals. Daily risk checks and analysis are usually performed by the Front Office itself or a separate risk management department.Rate this question:
-
- 4.
Which of the following is responsible for ensuring that traders mark their books at fair market value:
- A.
Credit Department
- B.
Asset Liability Management (ALS)
- C.
Product Control (IPV)
- D.
Trading Desk
Correct Answer
C. Product Control (IPV)Explanation
Product Control (IPV) is responsible for ensuring that traders mark their books at fair market value. IPV stands for Independent Price Verification, which is a process used to verify the value of financial instruments held by traders. By conducting IPV, Product Control ensures that traders are accurately valuing their positions based on current market prices. This helps to prevent any misrepresentation of the value of assets and ensures transparency and fairness in the trading activities.Rate this question:
-
- 5.
Which of the following is most likely IRRELEVANT to discuss with Middle Office?
- A.
P&L and VaR Reports
- B.
Spot and Vol Sensitivity Analysis
- C.
Expriry and Delivery Reports
- D.
Vol Surface & Market Data
Correct Answer
C. Expriry and Delivery ReportsExplanation
Expiry and Delivery Reports are most likely irrelevant to discuss with the Middle Office because these reports are typically more relevant to the Back Office or Operations teams. The Middle Office is usually responsible for risk management, trade support, and trade validation, so they would be more focused on P&L and VaR Reports, Spot and Vol Sensitivity Analysis, and Vol Surface & Market Data, which are directly related to their responsibilities.Rate this question:
-
- 6.
Which of the following would probably be most compelled by SD's Structured Products Builder, SPX (Light Version of SD), and Distribution Tools?
- A.
Middle Office
- B.
Pension Fund
- C.
Sales Desk
- D.
Corporation
Correct Answer
C. Sales DeskExplanation
The Sales Desk would be most compelled by SD's Structured Products Builder, SPX (Light Version of SD), and Distribution Tools. These tools are specifically designed to assist with sales and distribution activities, making them highly relevant and useful for the Sales Desk.Rate this question:
-
- 7.
Which of the following should be discussed with Fund Administrator who is interested in handling trade exceptions more efficiently (today they have multiple excel sheets)?
- A.
Automatic Comparison of Trades via eValueX
- B.
DGX (Building Multiple Pages encompassing all the instruments that they cover)
- C.
Blotter (Trade Repository & Greeks)
- D.
SDX (Portfolio with Sensitivity Analysis)
Correct Answer
A. Automatic Comparison of Trades via eValueXExplanation
The Fund Administrator should discuss the option of using Automatic Comparison of Trades via eValueX with the goal of handling trade exceptions more efficiently. This would be a more streamlined and automated approach compared to their current method of using multiple excel sheets.Rate this question:
-
- 8.
Accounting regulations in various countries require corporates to provide scenario analysis reports that show possible changes in MTM according to spot movements and volatility movements of +/- 5% and 10%. What is the most effective SD tool to answer this requirement?
- A.
Portfolio (Override spot and vol data inputs)on SDX
- B.
Term Structure Manipulation on SDX
- C.
Risk Matrix on SDX
- D.
Pricing Table on SDX
Correct Answer
C. Risk Matrix on SDXExplanation
The Risk Matrix on SDX is the most effective SD tool to answer the requirement of providing scenario analysis reports. The Risk Matrix allows corporates to assess the potential changes in mark-to-market (MTM) based on spot movements and volatility movements of +/- 5% and 10%. It provides a visual representation of the potential impact on the portfolio and helps in understanding the potential risks and opportunities associated with different scenarios.Rate this question:
-
- 9.
Which of the following is NOT covered by eValueX?
- A.
Independent fair market value
- B.
Multiple data cuts
- C.
Tradable prices
- D.
Revaluation of cross asset portfolios
Correct Answer
C. Tradable pricesExplanation
eValueX covers independent fair market value, multiple data cuts, and revaluation of cross asset portfolios. However, it does not cover tradable prices. The term "tradable prices" refers to the actual prices at which assets can be bought or sold in the market. While eValueX may provide information on fair market value and valuation of portfolios, it does not provide real-time data on tradable prices.Rate this question:
-
- 10.
At a meeting with a large fund administrator, you recognize that he needs an additional vendor to help him with price reconciliation and price challenges for a huge equity portfolio. What can you offer?
- A.
EValueX
- B.
SDX- EQ
- C.
Trade View (Blotter)
- D.
RMX
Correct Answer
A. EValueXExplanation
eValueX is the correct answer because it is a vendor that can provide assistance with price reconciliation and price challenges for a large equity portfolio.Rate this question:
-
- 11.
You are at a meeting with the head of the FX options desk at a Tier 3 bank, who wants to start managing an exotic options book, and is currently looking to replace or enhance his front office capabilities (thousands of vanillas currently). What do you suggest?
- A.
SDX- FX + DataX
- B.
RMX
- C.
EValueX
- D.
TradeView
Correct Answer
B. RMXExplanation
Based on the given scenario, the head of the FX options desk at a Tier 3 bank is looking to replace or enhance their front office capabilities. Among the options provided, RMX seems to be the most suitable choice. RMX is likely a software or platform that specializes in managing exotic options. It can provide the necessary tools and features to effectively handle the complexities of an exotic options book. Therefore, suggesting RMX would be a logical recommendation in this situation.Rate this question:
-
- 12.
A Tier 3 bank whose core system is Summit, turns to you because they cannot trade back to back TARNS and OTC CM Deals because Summit cannot capture these trades and run lifecycle management. What can you discuss with them?
- A.
Price on SDX, Deal Capture to TradeView, Integrate SD into Summit. When the Front Office trades a TARN or a commodity that Summit cannot handle, TradeView will communicate with the back office system to perform all the necessary trade events (and MTM) and thus the limitation for the front office will be eliminated
- B.
SDX enables the pricing of the widest range of exotic option types on all asset classes. With SDX the back office can price all these trades exactly like the front office. This should eliminate this limitation by the Back Office.
- C.
RMX offers the widest and most comprehensive coverage of exotic options for FX and CM, including TARNs that can automatically be managed and captured into their Back Office System.
- D.
Automated portfolio valuation (eValueX) integrated into the Back Office System enables Mark to Market of the portfolio, including the TARNS and Commodity Instruments, and this is probably the most cost-effective integrated solution to help eliminate this limitation
Correct Answer
A. Price on SDX, Deal Capture to TradeView, Integrate SD into Summit. When the Front Office trades a TARN or a commodity that Summit cannot handle, TradeView will communicate with the back office system to perform all the necessary trade events (and MTM) and thus the limitation for the front office will be eliminatedExplanation
By discussing the option of integrating SD into Summit and using TradeView for deal capture, the bank can eliminate the limitation faced by the front office. TradeView will communicate with the back office system to perform all necessary trade events and mark to market calculations for TARNs and OTC CM Deals that Summit cannot handle. This integration will ensure seamless trade execution and lifecycle management for these trades, resolving the issue faced by the front office.Rate this question:
-
- 13.
A Tier 3 Bank calls you because they are thinking about replacing Kondor+. They need a system for collateral management, cash management, and loan management. A combination of SD tools (RMX, TradeView, SDX-IR, SD-Connect, and possibly a few customizations) can provide them with a great cost-effective solution.
- A.
Yes
- B.
No
Correct Answer
B. No -
- 14.
An SD tool that can help Middle Offices with handling trade exceptions:
- A.
A. eValueX
- B.
B. SDX
- C.
C. Market Data
- D.
D. Pricing Table
- E.
E. Backtesting
- F.
F. All of the above
- G.
G. A,B, and C only
- H.
H. A, B and D only
Correct Answer
G. G. A,B, and C onlyExplanation
The correct answer is G. A, B, and C only. This means that the SD tool eValueX, SDX, and Market Data can help Middle Offices with handling trade exceptions. The other options, such as Pricing Table and Backtesting, are not mentioned as tools that can assist with trade exceptions.Rate this question:
-
- 15.
You are at a meeting with the bank's purchasing department. They inform you that they plan to cut costs dramatically in the bank during the coming year and that you should be prepared to have some licenses canceled. You could offer the following?
- A.
Discuss DGX with them, especially emphasize that DGX can save them costs in other areas
- B.
B. Discuss with them "Bulk Pricing" (more licenses for a much lower total cost per license)
- C.
C. Discuss the low cost of ownership of distribution tools
- D.
D. Assess with them areas that they targeted for cost-cutting and see if SD can save costs in these and other areas (ie market data costs)
- E.
E. You should not discuss any of these options with purchasing as they are not the decision makers, traders are.
- F.
B, C, and E only
- G.
A, B, and D only
Correct Answer
G. A, B, and D only -
- 16.
The fitting process of SD's data involves six stages of cleansing and fitting the data in order to ensure volatility surfaces optimally match market prices. The best description of the fitting stage involves:
- A.
An optimization mechanism to get the SD vol surfaces (output) as close as possible to the cleansed market data points (input)
- B.
Choosing the best model to calculate the price of the option
- C.
Collection of maximal data points for a tenor to best represent the market
- D.
Choosing the best data type (broker, market maker, exchange) to most accurately represent a particular tenor
Correct Answer
A. An optimization mechanism to get the SD vol surfaces (output) as close as possible to the cleansed market data points (input)Explanation
The fitting stage of SD's data involves an optimization mechanism to ensure that the SD vol surfaces closely match the cleansed market data points. This means that the goal is to minimize the difference between the calculated vol surfaces and the actual market prices. By optimizing the fitting process, SD can accurately represent the volatility surfaces based on the available market data.Rate this question:
-
- 17.
Which of the following is a key advantage regarding our OTC volatility surface data:
- A.
SD builds arbitrage free, smooth volatility surfaces from cleansed market data
- B.
SD uses the maximal amount of data points per tenor (data inputs)
- C.
SD uses market fixing rates that other vendors do not
- D.
SD doesn't use B&S formula whereas other vendors are pricing using B&S
Correct Answer
A. SD builds arbitrage free, smooth volatility surfaces from cleansed market dataExplanation
The key advantage of our OTC volatility surface data is that SD builds arbitrage free, smooth volatility surfaces from cleansed market data. This means that the data provided by SD is reliable and accurate, as it is based on market data that has been thoroughly cleansed and analyzed. The volatility surfaces created by SD are also smooth and free of any inconsistencies or anomalies, ensuring that they provide a realistic representation of market conditions. This is important for traders and investors who rely on volatility data to make informed decisions.Rate this question:
-
- 18.
SD uses to exchange data to build CM volatility surfaces.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
SD, which stands for "Standard Deviation," is a commonly used measure of volatility in finance. Volatility surfaces are graphical representations of the implied volatility of options across various strike prices and expiration dates. By exchanging data, SD helps in building these volatility surfaces, which are essential for pricing and analyzing options. Therefore, the statement is true.Rate this question:
-
- 19.
You meet the head of corporate sales at a local 3rd tier bank. They are existing SDX-FX customers - 1 license for traders and 2 for a sales team of 12. Usage report shows poor activity over the past 4 months and a renewal date up in 2 months. They have mentioned cost-cutting during a previous call. Some of the below answers may be correct, but what should be your main direction?
- A.
Convince him to schedule a training session for the two SD sales users - to make sure they are up to date with the new features.
- B.
Discuss ability to easily upgrade to RMX and a significant discount on price
- C.
Emphasise sales solution functionalities, and offer to expand licenses to the entire team at cost effective bulk pricing, along with ability to capture into tradeview for ongoing alerts etc.
- D.
Offer existing package at dramatic discount - so long as you keep the business.
Correct Answer
C. Emphasise sales solution functionalities, and offer to expand licenses to the entire team at cost effective bulk pricing, along with ability to capture into tradeview for ongoing alerts etc.Explanation
The main direction should be to emphasize the sales solution functionalities and offer to expand licenses to the entire team at cost-effective bulk pricing. This approach addresses the poor activity by providing the sales team with access to the full range of functionalities, which may improve their performance. Additionally, offering bulk pricing ensures cost-effectiveness for the bank, aligning with their cost-cutting goals. The ability to capture into tradeview for ongoing alerts further enhances the value proposition for the bank.Rate this question:
-
- 20.
A swap liquidity provider (market maker) is receiving requests and quoting to various corporate banks. He does not have an internal quoting and execution platform but rather communicates through various systems such as BBG, Reuters, email etc... What could you suggest to help them improve their bussines flow?
- A.
Use our risk and analytics solution to price on SDX-IR, capture to RMX and actively manage the risk. all on one simple SAAS application.
- B.
Suggest rolling out a sales solution process between the liquidity provider and the corporate banks - with ability to feed in the market maker's own market data and use the SD RFQ mechanism for execution
- C.
Use SDX-IR with Trade view for full front to back life cycle management
- D.
This is exactly a situation where the distribution solution is not relevant as they are happy with what they have. You need to focus efforts on convincing the traders of the liquidity provider to use SDX-IR as a stand-alone system for 'sanity checks'
Correct Answer
B. Suggest rolling out a sales solution process between the liquidity provider and the corporate banks - with ability to feed in the market maker's own market data and use the SD RFQ mechanism for executionExplanation
The suggested solution is to implement a sales solution process between the liquidity provider and the corporate banks. This process would allow the liquidity provider to input their own market data and utilize the SD RFQ mechanism for execution. This would improve their business flow by providing a more efficient and streamlined communication and execution system, eliminating the need for multiple external systems such as BBG, Reuters, and email.Rate this question:
-
- 21.
An existing SDX-FX customer - (corporate sales desk at a tier 3 bank) is facing growing competition from foreign banks. You meet the head of the desk and he mentions that what they have going for them is their good personal relationship with their corporate customers. What would be WRONG to offer as a value-added service from the bank's perspective?
- A.
Bank could roll out complimentary DGX access to VIP customers as a value added service
- B.
Enable DCX and offer VIP customers a direct multi bank trading platform - transforming their use of SD from an indicative pricing system to a live execution platform
- C.
Bank could upgrade SDX to corporex functionality (trade view + reports) - upload customers' exposures and generate relevant value added reports (Hedge effectiveness / Hedge Vs. exposure...)
- D.
Bank could roll out SPX licenses to preferred customers - for a simplified pricing/RFQ/execution mechanism between bank and customers - similar to the single bank platforms of the 1st tier banks
Correct Answer
B. Enable DCX and offer VIP customers a direct multi bank trading platform - transforming their use of SD from an indicative pricing system to a live execution platformExplanation
The correct answer is to enable DCX and offer VIP customers a direct multi bank trading platform. This would be wrong to offer from the bank's perspective because it would eliminate the bank's competitive advantage of having a good personal relationship with their corporate customers. By offering a multi bank trading platform, the bank would be encouraging their customers to explore other options and potentially switch to a foreign bank that offers better execution services. This would undermine the bank's existing relationship with their customers and make it easier for the competition to lure them away.Rate this question:
-
- 22.
Banks' middle offices are usually built up of the following teams:
- A.
Mark to Market + Clearing & Settlement + NAV & VAR
- B.
Product control (IPV) + Credit + Market Data + Model Validation
- C.
Traders + Analysts + Clearing & Settlement + Mark to Market
- D.
Structurers + Analysts + NAV & VAR
Correct Answer
B. Product control (IPV) + Credit + Market Data + Model ValidationExplanation
The correct answer is a combination of teams that typically make up the middle office in banks. These teams include Product control (IPV), which is responsible for valuing and controlling the risk of financial products, Credit, which assesses and manages credit risk, Market Data, which collects and analyzes market information, and Model Validation, which ensures the accuracy and reliability of financial models. These teams work together to support the trading activities of the bank and ensure compliance with regulations and risk management practices.Rate this question:
-
- 23.
Meeting a hedge fund risk controller, he says he needs weekly mark to market reports on approximately 40 FX options every Thursday at 2 different cut off times - 15:00 & 17:00 London. He also wants to be able to occasionally price and run analytics on his own. Naturally, you show him...
- A.
SDX + save to portfolio + open historical date at the relevant cut offs + click calculate + export to ecxel
- B.
EValuex - this is a classic revaluation deal
- C.
SDX + deal capture to trade view + scheduled M2M reports (evaluex)
- D.
SDX + save to portfolio + open saved portfolio - click calculate at exactly 15:00 & 17:00 London + export to excel
Correct Answer
C. SDX + deal capture to trade view + scheduled M2M reports (evaluex)Explanation
The correct answer is SDX + deal capture to trade view + scheduled M2M reports (evaluex). This option allows the hedge fund risk controller to capture deals, view them in the trade view, and schedule mark to market reports using evaluex. This means that the controller can easily track the performance of the FX options and generate the required reports on a weekly basis. Additionally, the controller can occasionally price and run analytics on their own using this option.Rate this question:
-
- 24.
Qualifying a corporate risk manager, this question is NOT relevant...
- A.
What are your exposures?
- B.
How often do you calculate NAV?
- C.
Do you only do zero- cost strategies?
- D.
Are you hedging on a group level and netting your exposures?
- E.
What is your forwards vs options ratio?
Correct Answer
B. How often do you calculate NAV?Explanation
The question asks about the frequency of calculating NAV (Net Asset Value), which is a measure of the value of an investment fund's assets minus its liabilities. This question is relevant for a corporate risk manager as it helps in assessing the financial health and performance of the investment portfolio. By calculating NAV regularly, the risk manager can monitor any changes in the value of the assets and make informed decisions regarding risk management strategies.Rate this question:
-
- 25.
The term CVA is mostly associated with...
- A.
Un-collateralized trades
- B.
Collateralized trades
- C.
OIS discounting
- D.
Multi-period hedging
Correct Answer
A. Un-collateralized tradesExplanation
CVA, or Credit Valuation Adjustment, is a measure used in finance to account for the potential loss that may occur due to the counterparty defaulting on a trade. It is calculated by considering the credit risk of the counterparty and is typically associated with un-collateralized trades, where there is no collateral or security provided by the counterparty. In such trades, there is a higher risk of default, and therefore CVA becomes an important factor to consider in pricing and risk management.Rate this question:
-
- 26.
Which of the following is NOT a typical reason to use a broker?
- A.
The broker aims to diversify the risk of a client's portfolio
- B.
The broker saves a client time
- C.
The broker is usually able to receive better prices
- D.
The broker provides anonymity
Correct Answer
A. The broker aims to diversify the risk of a client's portfolioExplanation
A broker's main role is to execute trades on behalf of clients and provide them with access to financial markets. They typically do not have the responsibility to diversify the risk of a client's portfolio. This task is usually performed by financial advisors or portfolio managers who analyze the client's investment goals and create a diversified investment strategy accordingly. Therefore, the statement "The broker aims to diversify the risk of a client's portfolio" is not a typical reason to use a broker.Rate this question:
-
- 27.
You are discussing the need for accurate Mark to Market with a customer who says that he is not worried about mark to market since he trades everything back to back to remove any market risk. Which of the following is the most relevant response:
- A.
When trading back to back the bank removes its market risk and you agree therefore that the mark to market is therefore not relevant
- B.
Even when trading back to back, the mark to market is still relevant so the bank can decide how much of the underlying it should buy or sell in order to hedge market risk
- C.
When trading back to back, the bank removes its market risk but still faces counterparty risk and the mark to market is therefore important for the monitoring of client credit lines and margining requirements
- D.
The fact that you traded back to back does not ensure that the bid/ask spreads will not change over time. In such cases, your P&L will change, and so it is important to mark to market frequently and correctly
Correct Answer
C. When trading back to back, the bank removes its market risk but still faces counterparty risk and the mark to market is therefore important for the monitoring of client credit lines and margining requirements -
- 28.
A client says they are planning to start ‘warehousing exotic risk’ in house. What does this mean?
- A.
That they will buy and sell both vanilla and exotic options to customers as a market maker and then hedge the risk
- B.
That for every trade they execute with a customer, they will neutralize the risk attached to that trade by trading the exact same trade with another bank, therefore removing any market exposure
- C.
That they will do leveraged trading on exotic options
- D.
All of the above
Correct Answer
A. That they will buy and sell both vanilla and exotic options to customers as a market maker and then hedge the riskExplanation
The client's plan to "warehouse exotic risk" means that they will engage in buying and selling both vanilla and exotic options to customers as a market maker. In doing so, they will also hedge the risk associated with these trades. This implies that they will take on the role of facilitating trades and managing the associated risks by offsetting them through hedging strategies.Rate this question:
-
- 29.
'Low notional high margin' is a term usually associated with...
- A.
Selling derivatives to large cap corporations that use existing systems that provide transparency to real market prices
- B.
Sales desks that offer exotic options rather than vanillas because they have a wider bid/ask spread - meaning more profit for the bank
- C.
Selling derivatives to high-net-worth individuals via private banking, providing the investors higher return per smaller notional
- D.
Selling derivatives to many retail customers and small corporations rather than to a few large investors/corporations
Correct Answer
D. Selling derivatives to many retail customers and small corporations rather than to a few large investors/corporationsExplanation
The term "low notional high margin" implies that the derivatives are being sold to many retail customers and small corporations rather than a few large investors or corporations. This suggests that the profit margin on each individual transaction may be higher due to the larger volume of sales, even though the notional value of each transaction may be lower. By targeting a larger customer base, the seller can potentially generate more overall profit.Rate this question:
-
- 30.
"Tradable prices" are:
- A.
Prices at which trades can be executed in the market right now
- B.
Consensus data derived from an average of three data sources
- C.
Official Fixing Rates such as LIBOR
- D.
Calculated prices from implied market prices
Correct Answer
A. Prices at which trades can be executed in the market right nowExplanation
"Tradable prices" refer to the prices at which trades can be executed in the market immediately. This means that these prices are the current market rates at which buyers and sellers are willing to transact. They reflect the supply and demand dynamics of the market at the present moment and can change rapidly. Tradable prices are important for traders and investors as they provide real-time information on the prevailing market conditions and enable them to make informed decisions regarding buying or selling assets.Rate this question:
-
- 31.
Meeting a bank, the head of sales describes his sales team as "generalists". He probably means that they are...
- A.
Well knowledgeable on the specific area of operation that they cover
- B.
In charge of running both trading and sales duties
- C.
Handling all of the customer types and/or are able to handle all of the offering (asset classes)
- D.
Responsible for capturing all the deals into the booking system
Correct Answer
C. Handling all of the customer types and/or are able to handle all of the offering (asset classes)Explanation
The head of sales describing his sales team as "generalists" suggests that they are capable of handling all types of customers and are knowledgeable in all areas of the offerings, including different asset classes. This implies that the team members are versatile and can adapt to different customer needs and requirements, as well as provide comprehensive solutions across various products and services.Rate this question:
-
- 32.
The 5 main SD solution pillars are:
- A.
Sales, SD-Connect, RMX, Trading, Valuation
- B.
Sales, Distribution, Risk/Analytics & CorporeX , Market data, Valuation
- C.
Trading, Sales, Distribution, Corporates, Valuation
- D.
SDX, SPX, DGX, RMX, Corporex
Correct Answer
B. Sales, Distribution, Risk/Analytics & CorporeX , Market data, ValuationExplanation
The correct answer is Sales, Distribution, Risk/Analytics & CorporeX, Market data, Valuation. This answer includes all the main pillars of SD solution, which are sales, distribution, risk/analytics & CorporeX, market data, and valuation. These pillars represent the key components of an SD solution and are crucial for its successful implementation and functioning.Rate this question:
-
- 33.
Why is STP so important to bank's workflow?
- A.
It enables better supervision on risk and exposures
- B.
It reduces operational risk, saves time and improves smoothness of deal entry
- C.
It dramatically shortens the time to delivery of the new systems that the banks buy
- D.
It enables wider coverage of asset classes and undelyings
Correct Answer
B. It reduces operational risk, saves time and improves smoothness of deal entryExplanation
STP, or Straight-Through Processing, is important to a bank's workflow because it reduces operational risk by minimizing manual intervention and potential errors in the processing of transactions. By automating the entire process, STP saves time and improves the smoothness of deal entry, allowing for faster and more efficient processing of transactions. This not only improves the overall workflow of the bank but also enhances customer satisfaction by reducing delays and errors in transaction processing.Rate this question:
-
- 34.
CSV, XML, FTP, SFTP, XLS - The following are usually associated with which SD product?
- A.
SDX
- B.
RMX
- C.
DataX
- D.
DGX
Correct Answer
C. DataXExplanation
The correct answer is DataX because CSV, XML, FTP, SFTP, and XLS are all commonly used formats and protocols for transferring and storing data. DataX is a logical choice as it encompasses all of these data formats and transfer protocols, indicating that it is the product associated with them.Rate this question:
-
- 35.
Middle Office is considering buying IR swaption vol data (for G7 currencies) and expresses concern with other vendors that are providing data that is not in line with the market for very OTM vol data (the wings). Which of the following is a key advantage of SD’s IR data:
- A.
Using three very liquid data points we generate the entire surface and then we have a six stage process to ensure the accurate reflection of the market
- B.
SD interpolates and extrapolates in order to ensure the vol surfaces are accurate
- C.
SD is unique in that we provide full Swaptions as well as Caps /Floors volatility surfaces while other data providers do not
- D.
SD receives full smiles for major expiries and swap durations and produces a full target cube from this data. SD fits the model to the target smila for each expiry / swap duration in order to calibrate to market
Correct Answer
D. SD receives full smiles for major expiries and swap durations and produces a full target cube from this data. SD fits the model to the target smila for each expiry / swap duration in order to calibrate to marketExplanation
SD's key advantage is that it receives full smiles for major expiries and swap durations, which allows them to produce a full target cube. They then fit the model to the target smile for each expiry/swap duration, ensuring accurate calibration to the market. This means that SD's IR data is able to accurately reflect the market for very OTM vol data, addressing the Middle Office's concern with other vendors providing data that is not in line with the market.Rate this question:
-
- 36.
The following is true of the FX data.
- A.
We have Implied Correlation data for all currency pairs
- B.
We use calculated Bid /Offer Vol Spreads
- C.
We use 10 delta Risk Reversal and Butterfly Data to calibrate to the market
- D.
Our deposits for all currencies are sourced from multiple contributors and we perform a sophisticated weighted average of the data
Correct Answer
C. We use 10 delta Risk Reversal and Butterfly Data to calibrate to the marketExplanation
The answer suggests that the 10 delta Risk Reversal and Butterfly Data are used to adjust or align the FX data with the current market conditions. This calibration helps ensure that the FX data accurately reflects the implied correlation and volatility spreads for all currency pairs.Rate this question:
-
- 37.
Which of the following is NOT a possible data source for CM data:
- A.
CM Analysts
- B.
Exchange Data
- C.
OTC Market Data
- D.
Use of Proxy Assets
Correct Answer
A. CM AnalystsExplanation
CM Analysts are not a possible data source for CM data because CM Analysts refers to individuals who analyze and interpret CM data, rather than being a source of the data itself. CM data can be sourced from Exchange Data, OTC Market Data, and through the use of Proxy Assets.Rate this question:
-
- 38.
Which of the following is NOT a buy - side client?
- A.
Asset Management
- B.
Corporation
- C.
Market Maker
- D.
Pension Fund
Correct Answer
C. Market MakerExplanation
A market maker is not a buy-side client because they are not purchasing assets or securities for their own investment purposes. Instead, market makers facilitate trading by providing liquidity in the market, buying and selling securities on behalf of others. They earn profits through the bid-ask spread, rather than through holding and managing assets like asset management firms, corporations, and pension funds, which are all examples of buy-side clients.Rate this question:
-
- 39.
Investment Banking is best defined as:
- A.
Banking that deals with investments, usually of high net worth individuals or large corporations that have excess cash and assets to invest
- B.
Banking that involves making markets, raising capital for corporations, and guaranteeing the sale of stocks or bonds
- C.
Banking that involves the management of collective investment schemes, supervision of commerical banks, and
- D.
Banking that mostly deals with deposits and loans from corporations, investment of consumers portfolios, and act as a lender of last resorts
Correct Answer
B. Banking that involves making markets, raising capital for corporations, and guaranteeing the sale of stocks or bondsExplanation
Investment banking is best defined as banking that involves making markets, raising capital for corporations, and guaranteeing the sale of stocks or bonds. This definition captures the core activities of investment banks, which include facilitating the buying and selling of securities in financial markets, helping companies raise funds through issuing stocks or bonds, and providing underwriting services to ensure the successful sale of these securities. Investment banks play a crucial role in the financial system by connecting investors and companies, facilitating capital flows, and supporting economic growth.Rate this question:
-
- 40.
What is the main purpose of using derivatives in the private banking sector?
- A.
Hedging Exposures
- B.
Complying with Accounting Regulations
- C.
Enhanced return on investment
- D.
Restructuring loans
Correct Answer
C. Enhanced return on investmentExplanation
The main purpose of using derivatives in the private banking sector is to enhance the return on investment. Derivatives provide opportunities to leverage investments and potentially increase returns. They allow investors to speculate on the price movements of underlying assets without actually owning them. By using derivatives, private banks can generate higher returns for their clients and increase profitability for themselves.Rate this question:
-
- 41.
An open ended hedge fund will typically be redeemed at:
- A.
An Official Fixing Rate determined by the Master Agreement
- B.
The decision is made by the Board of Directors
- C.
Net Asset Value per share
- D.
The Securities Exchange Commission Settlement price
Correct Answer
C. Net Asset Value per shareExplanation
An open-ended hedge fund is typically redeemed at the Net Asset Value per share. This means that when an investor decides to redeem their shares in the fund, they will receive the current value of their shares based on the fund's net assets divided by the total number of shares outstanding. This ensures that investors are compensated based on the actual value of their investment at the time of redemption.Rate this question:
-
- 42.
Part of the ISDA Master Agreement that sets the rules governing the mutual posting of collateral between two counterparties:
- A.
CVA
- B.
Basel III
- C.
MiFID
- D.
CSA
Correct Answer
D. CSAExplanation
CSA stands for Credit Support Annex, which is a part of the ISDA Master Agreement. It sets the rules and terms for the mutual posting of collateral between two parties involved in a derivative transaction. The CSA helps to mitigate credit risk by ensuring that both parties have sufficient collateral to cover potential losses in case of default. It outlines the types of eligible collateral, valuation methods, and procedures for collateral transfers. By having a CSA in place, counterparties can establish a framework for managing credit exposure and enhancing the stability of the financial system.Rate this question:
-
- 43.
Which of the following is a strong winning theme with our credit data offering vs our competition (we have a much better offering, cost aside):
- A.
Credit Default Swaps Data
- B.
Credit Index Volatility Surfaces
- C.
Consensus Prices
- D.
We offer caplet /floorlet volatility surfaces
Correct Answer
B. Credit Index Volatility SurfacesExplanation
Credit Index Volatility Surfaces is a strong winning theme with our credit data offering compared to our competition. This is because credit index volatility surfaces provide valuable insights into the volatility of credit indexes, allowing us to assess and manage risks more effectively. This information is crucial for making informed investment decisions and mitigating potential losses. By offering credit index volatility surfaces, we demonstrate our commitment to providing comprehensive and reliable data to our clients, giving us a competitive edge over our competitors.Rate this question:
-
- 44.
Which of the following is not a key winning theme in Equities Data?
- A.
We not only use exchange data, we also use OTC data
- B.
We have implied correlations data
- C.
We have strong long term data for very liquid indices
- D.
We use the maximum number of data points to represent the vol surface for each asset
Correct Answer
D. We use the maximum number of data points to represent the vol surface for each assetExplanation
The given answer states that "We use the maximum number of data points to represent the vol surface for each asset" is not a key winning theme in Equities Data. This implies that using the maximum number of data points to represent the vol surface is not considered a significant factor in achieving success in Equities Data.Rate this question:
-
- 45.
In creating vol surfaces, SD will use the most liquid market data from common strategies traded in the market as well as the ATM Volatility. Such common strategies include:
- A.
Vanilla, quanto and variance swaps
- B.
Call spreads, put spreads and calendar spreads
- C.
One touches, no touches and double no touches
- D.
Collars, strangles and straddles
Correct Answer
D. Collars, strangles and straddlesExplanation
The correct answer is collars, strangles, and straddles. These are common strategies traded in the market that are used in creating volatility surfaces. A collar is an options strategy that involves buying a protective put and selling a covered call to limit both upside and downside risk. A strangle is an options strategy that involves buying both a put and a call with different strike prices, anticipating a significant price movement. A straddle is an options strategy that involves buying both a put and a call with the same strike price, anticipating a significant price movement in either direction. These strategies provide valuable data for creating volatility surfaces.Rate this question:
-
- 46.
Which of the following is NOT true for LIQUID EQ indices?
- A.
We are using ATM, 25 delta risk reversals and 25 delta butterflies to parameterize the entire volatility surface
- B.
We sell Var Swaps data
- C.
Our implied correlation data is implied from frequently traded exotic strategies
- D.
We get very long term data from investment Banks
Correct Answer
A. We are using ATM, 25 delta risk reversals and 25 delta butterflies to parameterize the entire volatility surface -
- 47.
Which of the following parameters is NOT used to generate SD's vol surfaces, per tenor:
- A.
A measurement of ATM implied volatility
- B.
A measurement of convexity
- C.
A measurement of the historical volatility for same tenor
- D.
A measurement of skew
Correct Answer
C. A measurement of the historical volatility for same tenorExplanation
The historical volatility for the same tenor is not used to generate SD's vol surfaces. This is because historical volatility measures the past price movements of an asset, while vol surfaces are generated based on implied volatility, which represents market expectations of future price movements. Therefore, historical volatility is not directly relevant for generating vol surfaces.Rate this question:
-
- 48.
You have a meeting with the Head of the Middle Office in a Tier 3 Bank. The bank is using Calypso with its own internal models as its core banking system and has Fenics in the Front Office. Bank internal regulations have a strict IT security policy. What would be most relevant for you to aim for with them during your meeting?
- A.
Pre-Trade Pricing and Productivity Tools
- B.
Real-Time Position Keeping and Greeks
- C.
Market Data
- D.
EValueX automated portfolio valuation
Correct Answer
C. Market DataExplanation
During the meeting with the Head of the Middle Office in a Tier 3 Bank, it would be most relevant to aim for discussions on Market Data. This is because the bank is using Calypso with its own internal models as its core banking system and has Fenics in the Front Office. Market Data is crucial for accurate pricing, risk management, and decision-making in both the middle and front offices. Additionally, considering the bank's strict IT security policy, discussing how the bank obtains, manages, and secures market data would be important to ensure compliance and data integrity.Rate this question:
-
- 49.
Which of the following statements is NOT necessarily correct when discussing EQ:
- A.
SD provides accurate implied correlation data from frequently traded strategies from exotic desks
- B.
SD uses OTC data on the long tenors where exchange data is not available
- C.
SD uses statistical analysis tools to generate vol surfaces for very illiquid assets
- D.
SD uses at least 5 data points for every tenor thus maximizing the data inputs we use to generate volatility surfaces
Correct Answer
D. SD uses at least 5 data points for every tenor thus maximizing the data inputs we use to generate volatility surfacesExplanation
The statement "SD uses at least 5 data points for every tenor thus maximizing the data inputs we use to generate volatility surfaces" is not necessarily correct when discussing EQ. There is no requirement for SD to use a minimum of 5 data points for every tenor. The number of data points used may vary depending on the specific circumstances and requirements of the analysis.Rate this question:
-
Back to top